Xbox Cuts 268 More Jobs and Hands Halo to Activision as Ninja Theory Faces Closure
This was not routine housekeeping. In a memo titled "Continuing Our Reset," Xbox chief content officer Matt Booty confirmed 268 job losses across Halo Studios, other first-party teams and the Xbox Game Studios management layer. The next Halo is now an Activision project, Rare and World's Edge also move under Activision, Obsidian joins Bethesda, and Playground Games merges with Turn 10. Xbox says it is roughly three-quarters of the way through the 3,200-role reduction announced in July — meaning roughly 800 cuts are still outstanding.
一、Where the 268 Jobs Went: Halo Studios and Management Took the Hit
What the internal memo actually said
Booty's note is short, and the first of its three parts is the layoff. As published on Xbox Wire and confirmed by GamesIndustry.biz, the 268 roles were eliminated across Halo Studios, other first-party studios, and "the Xbox Game Studios management and central functions layer." He framed it as continuing the reset and said the company is about three-quarters through its previously announced restructuring.
Halo Studios is the only studio Microsoft named, and by several accounts it absorbed a significant share of the losses.
The Microsoft-wide number is larger than 268
The 268 figure covers gaming only. Aaron Holmes of The Information reported hundreds of cuts hours before the memo went out. Business Insider put the company-wide number at around 500, and GeekWire, citing Microsoft directly, reported fewer than 600 globally, with about 300 of those in Washington state. It sits inside a wider Microsoft reduction of 4,800 roles announced in July.
二、The Structural Change: Halo Is Now Built by the Company That Bought Its Publisher
A purpose-built team, separate from Call of Duty
The next mainline Halo will be developed by a new, purpose-built team inside Activision. Booty specifically wrote that this team is "separate from ongoing development and plans for Call of Duty." Halo Studios does not close, but keeps only a small team supporting games already in market, including the 2026 remake of Halo: Combat Evolved.
Activision is the publisher Microsoft bought in 2023 for roughly $69 billion. Halo, meanwhile, is the franchise that defined the original Xbox. Activision president Rob Kostich called it "an honour and a responsibility," adding: "For Halo, our goal is clear: make the greatest Halo game ever."
Rare and World's Edge move under Activision too
Beyond Halo, Activision picks up Rare, the studio behind Sea of Thieves, and World's Edge, which looks after Age of Empires. Obsidian Entertainment is consolidated under Bethesda, Microsoft Casual Games joins King, and Playground Games merges with Turn 10 to focus on Forza and Fable. Xbox's first-party network is effectively folding into three publishing groups: Activision, Bethesda and King. An all-Xbox town hall is reportedly scheduled for October 6.
三、Ninja Theory: Two Deals Collapsed
What a "proposed closure" consultation means
Ninja Theory, the Cambridge studio behind Hellblade: Senua's Sacrifice and a BAFTA winner, is the sharpest edge of the announcement. Microsoft had been trying to sell it. Booty's note reads: "Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward."
To be precise: the studio has not closed. Consultation has only just started, and Microsoft says alternatives remain on the table. But two failed sales followed by a closure proposal is not a good sign for the studio's roughly 170 employees. Arkane Lyon is in the same consultation process, expected to run through the end of 2026.
Undead Labs got the ending Ninja Theory wanted
Undead Labs completed its own transition away from Xbox, keeping a new publisher and a day-one Game Pass release for State of Decay 3. Compulsion Games and Double Fine regained independence earlier, with their IP catalogs and funding intact. Same exit door, very different outcomes.
四、Why Xbox Is Cutting This Hard
Xbox's own words: margins "3-10x lower"
Earlier this year Xbox acknowledged it was "operating at margins that are 3-10x lower than comparable platform and publishing businesses." CEO Asha Sharma called what followed "the most significant restructure in Xbox history." The 3,200-role plan and the promise to flatten management to no more than five layers, and three where possible, are the execution of that admission.
Meanwhile, Bungie is walking backwards
The counter-example landed the same week. Bungie, owned by Sony, cut 292 people in June and shipped Destiny 2's final content update on June 9. On September 21, studio head Poria Torkan and Marathon general manager Josh Deane published a video and a blog post titled "The Next Chapter for Bungie," stating the studio is "not done with Destiny" and that it has started restoring vaulted campaigns, destinations and raids to all players. In the video, Bungie admits the content "never should have been ripped away to begin with."
One studio is losing its flagship; another is polishing it back up. The 2026 question is no longer whether to shrink, but what to protect while shrinking.
五、The Other Side: Cuts Are People, Not Strategy
It is fair to note that layoffs do not automatically mean worse games. Trimming management layers and refocusing studios can keep projects like State of Decay 3 alive. But the costs are real: Ninja Theory's future remains unresolved, Halo fans immediately asked whether the series becomes a Call of Duty reskin, and hundreds of people rallied at Bethesda's headquarters earlier this summer to protest the wider Xbox layoffs.
The more practical question: when and where do the remaining roughly 800 cuts land?
六、My Take: Handing Over Halo Is an Admission
I care less about the number 268 than about Halo and Rare ending up under the publisher best known for an annual shooter pipeline. A platform's defining exclusive being handed off is, functionally, an admission that Xbox can no longer afford to carry its own flagship.
In the short term the math works. In the long term, when a company outsources its own front door, players start outsourcing their trust. Come discuss in the Gghubs comments.
七、FAQ
How many people did Xbox cut this time?
Xbox eliminated 268 roles on September 22, 2026, across Halo Studios, other first-party studios and the Xbox Game Studios management layer. It is part of the 3,200-role plan announced in July, and Xbox says it is around three-quarters complete.
Who is developing the next Halo?
A new, purpose-built team inside Activision, kept separate from Call of Duty development. Halo Studios retains a small team supporting games already on sale, including the 2026 Halo: Combat Evolved remake.
Is Ninja Theory closed?
Not yet. Microsoft opened consultation with employees on a proposed closure on September 22 while continuing to explore other options, after two separate sale agreements collapsed. Around 170 employees are affected.
How many cuts remain in Xbox's restructuring?
Microsoft announced 3,200 roles for the fiscal year, with 1,600 taken in July. At roughly three-quarters complete, about 800 remain. Company-wide, GeekWire reported Microsoft put the latest round at fewer than 600 roles globally.